SWOT and PESTEL Analysis of Samsung

Samsung was founded by Lee Byung-chul. In 1938 Samsung was born as a company that was dealing with fruit & vegetable and dried fish. The company was exporting its product from South Korea to Beijing in China. In 1969, Samsung Electronics was born. From there, the company started acquiring and creating different business establishments including a hospital, paper manufacturing plant, life insurance company, department stores and many others. The company was destined to become a household name starting in its mother country and spanning its reach to many other cities internationally. http://www.streetdirectory.com/travel_guide/116664/electronics/the_history_of_samsung.html

In 1974, electronics started catering to the international market in the seventies kicking off with the corporation’s acquisition of half of Korea Semiconductor which made it the leading electronics manufacturer in the country.The success of Samsung as a technology provider continues to grow through the eighties as Samsung Electronics was merged with Samsung Semiconductors and Telecommunications. This paved the way towards a stronger hold on the international market with high-tech products that will become a staple in every home. This development continued on through the next decade as Samsung kept on going beyond its boundaries and restructuring its business plan to accommodate the global scene. Adopting a new form of management proved to be a wise move for the company as its products made their way on the list of top must-haves in their various fields. TV-LCD’s, picture tubes, Samsung printers and other high-tech products became popular acquisitions due to their high quality. When Samsung ventured into the LCD industry in 1993, it became the world’s best. http://www.streetdirectory.com/travel_guide/116664/electronics/the_history_of_samsung.html

To date, Samsung continues to maintain its status as the “world’s best” technology provider. Its highly qualified workforce is still striving for excellence in their respective fields making the whole company a huge success in the making. The secret to the company’s continuous success is in the constant improvement of its management structure and the application of its philosophies: “We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society.” http://www.streetdirectory.com/travel_guide/116664/electronics/the_history_of_samsung.html

MICRO ENVIRONMENT ANALYSIS OF SAMSUNG

The aim of this section is to conduct an internal environment analysis of Samsung which will investigate the environment in which Samsung operates in. components of the analysis will be those in which the company has control over, as known as internal environment.

Organisation Size

Strengths

• Samsung is the second biggest telecommunication industry in the world through its innovation smart phone.
• Samsung has wide range of product includes Cell phones, Tables, Tv’s Cameras, Home appliances, laptops, etc.
• Samsung have increase their brand value in this past three to four years
• Samsung is leading in design features. For example Samsung was the first one produce dual screen phones, and they have a thinnest and lightest note pad ever.
• Their design are attractive and stylish at the result their sales are moving in high volumes

Weaknesses

• Their prices are low, hence their product loss value easy in the market
• They launch a new phone after another that can cause confusion to the customers.
• Poor creativity in terms of software, mostly they steal Apples software ideas
• Their products are not use friendly, as compare to Nokia phones
• They are leading in hardware but they have too much dependence for their software from other parts.

EXTERNAL ENVIRONMENT ANALYSIS OF SAMSUNG

This section will focus on the Macro environment of Samsung and I will explain how the external factors affect the company by looking in their opportunities and threats also go through PESTEL analysis.

Opportunities

• Samsung need to introduce user friendly products and educate their market about their product, because there is a big market in Africa yet the majority is uneducated,
• Here in South Africa they need to open their own stores, where they go to sell only their own products
• Samsung could launch no name brand like MTN and Vodafone whereby they will take the out date old model, change only a cover and sell with cheaper price.

Threats

• Low cost competitors from China can affect Samsung
• All Samsung competitors bought their product parts in Chine that can lead a future fall to Samsung.
• The war between Samsung and Apple might contaminate the image of Samsung
• Samsung was banned from importing their products in a Euro Zone
• Apple use Chine to fight Samsung
• Amalgamation of Apple and Nokia could be a threat to Samsung

http://www.marketing91.com/swot-analysis-samsung/

PESTEL ANALYSIS

”The PESTEL analysis is an analysis of the external macro environment in n n which an which an organization operates. These are often factors which are beyond the control or influence the business (RapidBi, 2013).

PESTEL will be used as a tool to analyze the Macro environment of Samsung.

Political environment

Looking at the political environment, how the impact of politics affecting Samsung globally, As much as Samsung is a good company not everybody see like that, due to the strong competition between Apple and Samsung it ended up involving government in other countries. American government trying to stop Samsung influences the Euro zone to block Samsung to have market around Europe. Specifically in German Samsung was forced to withdraw its Galaxy tablet. Also South Korea stops Samsung to operate in there due to the political differences between Japan and South Korean government.

Economic environment

Samsung has expanded its business to more than 58 countries. Samsung mostly they invest heavily to the infrastructure in each end every country they have a business in. Here in South Africa they bought a land whereby they going to build the big plant, whereby it will manufacture or assemble its products for whole Africa, it means there are employment opportunities coming and there is an opportunity for South African economy. This plant is expected to employ more than 3000 people.

Social Environment

Social trend in South African environment are constantly changing as new innovation technology and services have impact to the needs and wants of South African communities. The stats show that there is an increase attraction to the technology which has become the primary means of communication. Samsung find that gaps to improving people’s lives. The challenge is that many people do not know how to use Samsung products in a proper way especially these new tablet phones. People steal need to be educated on how to use these tablets phone that is a challenge of our societies.

Technological environment

Technology in South Africa has advance and grown rapidly over the years and has affected the way we do things here in South Africa. Technology has change the way the business is done as social media has a crucial role in sustainability strategy of most businesses. Samsung find a way of take a business out of the building structure to the pocket. By introducing Galaxy Note 2 is more tablet like than phone like, it mean that you can do you work in the public transport, in the restaurants, anywhere, without filling intermediated of carrying big machine.

Ecological environment

Samsung Electronics is operating its own voluntary take-back system across Korea (Republic), using a network of 130 of service centers and Anycall Plaza retail outlets (exclusive outlets for Samsung’s ‘Anycall’ brand). End of Life mobile phones are collected either free of charge, or in some cases with a customer reward. The returned phones are then sorted and transported to recycling facilities for scrapping. They makes an effort to develop environment-friendly product that minimizing an impact to environment through whole process from getting raw materials, production, transportation, usage and end-of-life disposal by adding ‘environment’ on function, price, quality, design that were the essence for product development, Samsung reporting the recycling amounts for Korea and Japan from 2004, for Europe from 2005, and for the United States from 2006. For 2006, they have forecasted an estimate of volumes they expecting to recycle this year.

http://www.samsung.com/us/aboutsamsung/corpcitizenship/environmentsocialreport/environmentsocialreport_VoluntaryPrograms.html

Legal environment

The South African government has decided in April of 2011, the Consumer Protection Act68 of 2008 should come in operation. This might have a negative impact to the company like Samsung because they have a tendency of dumping their low quality product in third world country to maximize their profit as they did in India. There are strong labour laws in South Africa which might have a strong negative impact to Samsung operating in South Africa as they intend to open a big factory in Johannesburg as a distribution center for Africa; it will be a challenge to them if they think they are going to exploit people in South Africa.

MARKETING ENVIRONMENT

This section will be focusing on the Marketing Environment in which Samsung operates and I will be evaluating its effects on the new Tablet in term of the competitive in the industry.

Industrial Challenges

This section will be broken into three parts: Porters 5 forces, competitive analysis by comparison and industry trend

Michael porter’s porters fives forces

Porter five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An “unattractive” industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching “pure competition”, in which available profits for all firms are driven to normal profit. http://upload.wikimedia.org/wikipedia/commons/6/66/Porters_five_forces.PNG

http://upload.wikimedia.org/wikipedia/commons/6/66/Porters_five_forces.PNG

http://upload.wikimedia.org/wikipedia/commons/6/66/Porters_five_forces.PNG

This model will be used to analyse the Industry Challenges faced by Samsung

The threat of potential new entrants (Low)

High capital is required to compete in technology industry. Capital to buy the equipment’s and capital to carry out the marketing activities and other expenses should be available. However, Microsoft will release its new first Tablet soon, this mean Microsoft will be a new threat to Samsung. Microsoft will lavage on the success of their software

Product Differentiation

So far there’s no different on how the market design its software, hence the market hope that Microsoft will bring something new in the market, if not they will not survive in this industry because this only way they can differentiate themselves

Even then, overcoming issues such as customer loyalty and switching costs would be another large barrier to entry such as Microsoft.

The threat of substitutes (High)

The threat of substitute products within the industry, however, is low.

Even though there is an increased popularity of Tablets, they are busy doing same thing. However Samsung is the one who inventing a new trend that shift from tablet to galaxy phone which it have all feature that tablets has and smart phone features. This is the only direction the market goes.

The bargaining power of buyers (High)

Reliability is one of the area the companies should concentrate in, however if an organisation loss its focus on customer wants, it is easy for customer to move to another company. Companies should know how much the customer is will to pay. Buyers easily switch cost with the increased of choices of mobile companies because this products are similar to one another; If the company does not beat market, the buyer will switch to those companies that have better features or better price. However Samsung is sitting on top of the game, they always want to beat the market by releasing designs and they consider their prices they offer their customers, even now Samsung is the one have a cheaper tablet in the market.

Bargaining power of supplier

Samsung is its own supplier of most components. Samsung also happens to be its own supplier for raw materials and they design for themselves. The bargaining power of suppliers is high because suppliers’ goods are critical to the buyers’ marketplace success, for example Samsung is a supplier of Apple which is the have a significant role in Apple prices.

(The intensity of competitive rivalry (High)

The smart phone industry has many competitors that are equally balanced, and thus rivalry is high. The market for smart phones has slowed in growth since its boom, so pressure to take customers from competitors is also high. Differentiation in the smart phone industry is also at a point where it is very short-lived (Huvard et al, 2011, p.9)